Selling My Business How Much is my Business Worth. Almost all businesses are for sale to some degree. Lets say your business is not For Sale. Assume Your business is worth $100,000. You love what you are doing, someone contacts you with an offer to buy your business for $500,000. Is your business now For Sale? The preceding is not a likely scenario for most business owners. To successfully sell your business planning and preparation is needed. But if you are now or at some point considering the sale of your business you may want to consider the following 3 points:
1. Identify your honest interest level when selling your business. Early in the decision process of selling your business consider what approach you may take towards selling your business. As a Business Broker in Florida I interact with the various interest levels by small business owners.
- My business is not for sale but if someone walks in and offers me way more than what I think it is worth- I would sell my business
- My business is not for sale but if you run across someone that would want to buy it please let me know.
- I want to pursue selling my business but I won’t sell it for less than…( A somewhat inflated price) . I am willing to accept that it may take 1-2 years to sell my business, and if priced too high I can accept the fact that my business may not even be sold.
- I want to pursue selling my business and after significant due diligence I feel the price I am seeking is consistent to what other like businesses have recently sold for.
- I want to sell my business and I want out now. I will set my price aggressively and set a lower price than price currently sought for businesses similar to mine. I will expect this aggressive pricing to both help me sell my business and decrease the amount of time it will take to sell my business.
If you do have a true interest in selling your business as suggested in above last 2 points you do need to exercise due diligence to gain understanding of what the value of your business may be.
Photo (c) nett.com.au
2. You can expect that the perceived value of your business to you and the value of the business to a potential buyer will probably be 2 different values.
- Ultimately the price of your business is what a willing and able buyer is prepared to pay to buy your business.
- Seek “reasonableness” to your price that you will seek to sell your business for. If similar businesses to yours are sold at 1 1/2 times adjusted cash flow, why is yours worth 3 times adjusted cash flow?
- Ask yourself what you honestly would pay to buy your business.
- Do a free Search on my website https://www.sellabusinessflorida.com 0r similar sites to research what similar businesses to yours is asking to sell their business for. Remember – all businesses are different, but use such a search as part of your due diligence. A business for sale asking price and the price a business sold for can be greatly different, but asking prices can provide some basis-while current Businesses Sold information is more pertinent
- Speak to your trusted advisers. A business broker may be able to help with non-public info on sold businesses in your area. Your accountant or attorney also may or may not be aware of such sales as well. A Professional Business Valuation specialist may benefit you.
3. Whether it is part of your exit strategy to sell your business or not, you should have an exit strategy.
- Most small business owners do not have an exit strategy.
- If you own a business you should have an exit strategy. Do some planning, perform some due diligence. Know what you have or may have.
- Even if you are not planning to sell your business there is value in knowing approximate value of this potentially large asset. You know what your house is worth, you car, your other assets. Understanding the value of your business can be a significant piece of information when planning ahead.
Selling ones business can be a rewarding experience when done properly. Understanding a proper value for your business can set the stage to a successful sale of your business or a business that is unable to find a willing and able buyer.
This is certainly a very common question and one that deserves a good answer.
There’s no question that selling a business can be a tricky and sometimes complicated matter. There’s also no question that a seller should have a good idea of what their business is worth before they offer the business for sale. The same is certainly true for those buying a business.
Without intending any disrespect for their role in the sale of a business, “rules of thumb” sometimes quoted by business brokers may or may not give you a good indication of what your particular business is worth. Our conventional methods, on the other hand, will provide a reliable indication of the value of your specific business – including both the tangible and intangible assets.
That’s where we come in to work with you and your business broker. Our <a href=”http://arrowfishconsulting.com/BusinessValuation.html” target=”_blank”>business valuation services</a> practice is staffed by credentialed <a href=”http://arrowfishconsulting.com/arrowfishexecteam.html” target=”_blank”>business valuation experts</a> who have been trained by the best organizations in the country. Our work is reliable and our fees are very competitive. If you’ve got a question about what your business or prospective acquisition is worth, please contact us. Initial consultations are always free.
This is certainly a very common question and one that deserves a good answer.
There’s no question that selling a business can be a tricky and sometimes complicated matter. There’s also no question that a seller should have a good idea of what their business is worth before they offer the business for sale. The same is certainly true for those buying a business.
Without intending any disrespect for their role in the sale of a business, “rules of thumb” sometimes quoted by business brokers may or may not give you a good indication of what your particular business is worth. Our conventional methods, on the other hand, will provide a reliable indication of the value of your specific business – including both the tangible and intangible assets.
That’s where we come in to work with you and your business broker. Our business valuation services practice is staffed by credentialed business valuation experts who have been trained by the best organizations in the country. Our work is reliable and our fees are very competitive. If you’ve got a question about what your business or prospective acquisition is worth, please contact us. Initial consultations are always free.
Arrowfish- Thanks for reading and commenting. I agree a thorough independent Business Valuation can certainly benefit a small business owner looking to sell or potential business buyer. Not all business brokers do use the published “rules of thumb” – I do not. I personally had bought 8 businesses to grow my previous business and like to understand the income statement and balance sheet and outlook of the company and the industry they operate within to determine value. Getting a small business owner to pay for a business valuation is a process all its own. best regards Scott
Scott,
You sound like a business broker buyers and sellers should seriously consider, precisely because you like to get into the details of the income statement and balance sheet.
As to cost….well…you make a fair point. Our company recognizes this, which is why we’re flexible. We’re happy to tailor the scope of our business valuation services to whatever degree of formality the client wants. We don’t push a cookie cutter, one size fits all approach that means we always do steps 1-10 and always write a lengthy report. If the client needs something less formal as a guide or reference point, we’re happy to do that. If they need something more formal for IRS reporting purposes, we’re certainly able to do that as well.
Keep up the good work. If we can be of service to you, your clients or any of your readers, just let us know. Initial consultations are always free.